All Forum Posts by: Sean Dawson

Thanks for the comment here Andrew. Yes, the HELOC is a higher interest rate and adjustable, but the closing costs are much less. If I used the HELOC I would indeed pay it back as soon as I cash out refinanced the investment property, so I would not carry over any debt from the HELOC and then just do that again once I found another property. So, my strategy would change if I did go the HELOC route.

To make the decision even more difficult, there is an option to do the mortgage/cash out refi on my primary, and also at the same time have access to a HELOC under the same closing costs. This sounds like the way to go pending my previous questions about length of time in which I can acquire the cash from the loan and if I will be getting stuck with interest payments while I am still searching for an investment property.

Let me know if you have any further thoughts and thanks again!! 

Thanks for the quick reply and insights here Tom! 

Just to clarify, I will be using either source of initial funding to purchase the property in whole so there will be no down payment, but rather a full cash purchase. Not sure if that makes a difference or not. Once I cash out re-fi the investment property I purchase, I will use that money to roll over into my next investment property and so on, so I will not be paying back the initial loan on my primary residence. The benefit here is that I will eventually have this loan paid off completely since I am paying down the debt of the loan and not just the interest only as I would for a HELOC correct? Is that as advantageous as it sounds?

So, should I lock in that low rate and go the cash out refi route on my primary to get started, (I guess it's not a refi since I don't have a mortgage and own my primary outright, but rather a mortgage of sorts?) or should I go the HELOC route?

What about the timing in which I have to start paying the interest payments on the cash out refi/mortgage? Can I just get pre-approved and then accept the cash from the loan once I have an offer made on a property? What does the turn around time look like here to get cash in hand once I get pre-approved? Would I be able to get these funds in time before escrow closes if I did have a property under contract?

I know, way too many questions!! 

I am a first time investor looking to use the BRRRR method out of state. I have 100% equity in my home to the tune of about $450k. Should I do a HELOC to purchase my first investment property or should I look to take out a cash loan on my property and use that as the seed money for my first property and then keep rolling it over into new properties. I hope do have 10 doors in the next two years. What are the Pros and Cons of each? I was told by a lender that if I take out a loan vs doing a HELOC, then I have to start paying interest payments on that loan right when I am approved for the loan and accept it. Can't I just get pre-approved for the loan and then access the funds as soon as I make an offer on a property and need them? Thanks in advance for your help here!!

Hey all, here is another one for you. First off, I am a total newb to the real estate game, but have been doing a lot of research over the past year including reading both of Daniel Green's books, (which are awesome) and am ready to start the process of analyzing properties and various markets. I live in California, so I obviously need to go out of state. 

Any insights as to what markets I should be looking at? I have about 100k to invest in cash and another 350k in hard money that I have access to. I was looking for a market with a low initial investment cost, landlord friendly laws regarding evictions and other matters, and one that leans more on the cash flow side of the equation than appreciation, but that is not as important as finding a low risk market if there is such a thing. I am looking for the 1% rule if not better much like we all are I presume. The goal is to have as many cash flowing doors in as little time as possible. I know, isn't that everyone's goal? Are there any other factors when looking for a market that I should be considering? Memphis seems intriguing. Does anyone have an opinions here on the Memphis area?

Feel free to message me directly as well if you don't want to blow up your market by posting in this forum. Any help and guidance would be greatly appreciated!!

I guess what I am really wondering is if you are you essentially trading potential equity in a home for being able to avoid a seasoning period with the delayed financing route? Can I still take a delayed financing loan out while still retaining a certain amount of equity in the home if my appraisal after repairs is higher than the my initial investment in the property. Or is after repair appraisal value not even taken into account? Do you simply get every dollar that you put into the home right back out while not building any equity. I guess I am asking is the loan based on an LTV ration after rehab. Thanks again for any insights!

Has anyone had any experience using delayed financing for the BRRRR method? What are the pros and cons to this versus a traditional re-finance? I understand there is no seasoning period, but does that mean that you also do not have any equity in the home after the cash is taken back out of the home with delayed financing? Or are you still able to get it re-appraised after the rehab is done and get the LTV ratio that you want with a BRRRR property after it is appraised?

Also, for rehab costs I understand that I need to put that money into some kind of escrow when I purchase the house. Is this correct? Any insights would be greatly appreciated. Thanks!

Thanks for the insights here @Ohad Benjamin and @Andrew Postell! I will re-post this in the BRRRR forum as you recommended and keep the conversation going.

I guess what I am really wondering is if you are you essentially trading potential equity in a home for being able to avoid a seasoning period with the delayed financing route? Can I still take a delayed financing loan out while still retaining a certain amount of equity in the home if my appraisal after repairs is higher than the my initial investment in the property. Or is after repair appraisal value not even taken into account? Do you simply get every dollar that you put into the home right back out while not building any equity. I guess I am asking is the loan based on an LTV ration after rehab. Thanks again for any insights!

Has anyone had any experience using delayed financing for the BRRRR method? What are the pros and cons to this versus a traditional re-finance? I understand there is no seasoning period, but does that mean that you also do not have any equity in the home after the cash is taken back out of the home with delayed financing? Or are you still able to get it re-appraised after the rehab is done and get the LTV ratio that you want with a BRRRR property after it is appraised?

Also, for rehab costs I understand that I need to put that money into some kind of escrow when I purchase the house. Is this correct? Any insights would be greatly appreciated. Thanks! 

Thank you all for the insights and responses! I have heard great things about these forums and love the activity here from seasoned investors such as yourselves. The real estate industry is a completely new venture for me, but living here in California there is little to no ROI to be had. I have read a lot of great things about the Memphis RE market, but have yet to visit to answer one of the previous questions. I thought I would start here on BP to see if this was even a viable market for the BRRRR strategy and then would plan to visit once I started making connections.

@Jackson Long I appreciate you cynicism and we all need someone to play devil’s advocate so keep it coming. 

To answer your question @Chris Clothier I know very little about the Memphis market and am humbly hear to learn from those who know best such as yourselves. I have heard zip codes can change street to street rather than neighborhood to neighborhood which is why I am really trying to connect with the right agent. Is that fairly accurate or are there certain zip codes that i should be targeting where this does not apply? I am looking for what most are I presume, distressed properties in a C+ or B neighborhood that can be rehabbed and rented for 1% of my total basis of investment and that I can recoup most if not all of my initial investment after the re-finance. Chris, why have you not employed the BRRRR strategy in your investments? Is it a personal preference or does the Memphis market not work for this strategy.

@Dean Harris have all of your BRRRR investments been successful and what is the hardest part in your opinion in recouping most if not all of your initial investment and then making the property cash flow once you do the cash out re-fi?

Once again, appreciate everyone’s insights here!!